Prop House Protocol: Public Infrastructure by Nouns DAO

Description:

What started as an experimental approach for Nouns DAO to deploy capital has become core infrastructure to onboard and fund builders within the Nouns ecosystem. Consequently, the idea has been spreading. From ENS, to Ape Coin to AAVE, communities across the broader crypto space have expressed interest in using Prop House.

I propose building the Prop House Protocol as public infrastructure with the aims of it being a tool for all to use while proliferating the Nouns meme at the deepest level.

Where we are today:

Summary:

  • 300+ proposals submitted
  • 2,000+ votes allocated
  • 5 active houses
  • 157 ETH committed to 52 builders across 10 funding rounds
  • prop.house UX continues to improve
  • External interest:
    • ENS building their own version of Prop House
    • Ape coin and Aave are amongst the 10+ communities that have expressed interest in setting up their own house
  • Please review the Expenses report for an overview of all things Prop House financials

Proposals:

At the time of writing (06/18), 18 proposals have had enough time elapse since being funded to make a judgement on whether or not they executed. So far, only 1 out of 18 proposals has had a no-show. Overall, quality of proposals corresponding to amounts funded are still desirable. With the launch of Nouns Combinator (25 ETH single winner house), we hope to see more ambitious proposals be submitted.

Funded Proposals (as of 06/21/21)

Houses:

We are currently running 4 nounish houses with another two coming online soon:

  • Nouns Launchpad
  • Lil Nouns
  • NounPunks
  • Nouns Combinator
  • Nouns DAO Japan (coming soon)
  • SharkDAO (coming soon)

Within the main Nouns house, quality has stayed consistent while proposals are averaging ~38 submissions per round:

Two experiments were run with external houses:

  • Zorbs failed due to the round being endlessly spammed. Beyond the spam, there was a clear misconception in what Prop House was to be used for, hinting at more education content being needed.
  • Mfers house has been quite a success. The announcement tweet rallied the community and the subsequent reaction points to Nouns earning goodwill as a leader in the CC0 community.

The Protocol

The protocol refers to the suite of smart contracts and open-source software that would enable anyone to run their own auctions and/or Prop House web app.

Why build the protocol in the first place?

Currently, Prop House runs as a centralized system. Each round and all of its parameters are decided on by a few people. More importantly, the Prop House multi-sig handles all the funding. As volumes grow, it increasingly becomes a risk factor.

Building Prop House into a protocol would enable the DAO to have more control over how the capital is deployed. To illustrate, the following scenario would be possible with a live protocol:

  • An on-chain proposal to the DAO to set up 10 rounds at x ETH for y winners over the next 3 months

Why build it as public infrastructure?

Beyond proliferating the Nouns aesthetic, I believe building public infrastructure proliferates the meme at a much deeper level hence it being the way forward.

Nouns is uniquely positioned to capture value via novel means. One of the drivers for auction demand is how aspirational the meme is. Akin to luxury goods, demand is in large part driven by psychology, not just ad spend or certain KPIs. It then follows that building public infrastructure that sets Nouns as the most forward-thinking community also contributes to auction demand.

Much more than a brand or a visual meme, Nouns is an invitation for others to join us in taking the new tools we now have at hand to rethink how we build the world around us. To that extent, public infrastructure for all is the Nounish thing to do.

To continue exploring:

Along with building the protocol, we are looking forward to:

  • Experimenting with bigger rounds
  • Integrating with Snapshot
  • Exploring new auction formats
    • Infinite auctions
    • Retroactive rewards
    • Pod and mandate specific houses
  • New nounish houses (Nouns DAO Japan, SharkDAO are coming soon)
  • Updates around the UI (past winners, voting data, etc)
  • Helping other communities onboard

Budgets

Past:

Total funded by the DAO since Dec ’21 through via proposals 23 & 62:
- 95 ETH paying Prop House contributors (~50% still remains for Jul & Aug)
- 150 ETH in funding Prop House builders

Current Ask:

Operations (600 ETH):

  • 100 ETH: Adds two solidity developers to payroll for remaining 2 months (July and August)
  • 440 ETH: Extends Prop House development runway by 4 months (Sept - Dec)
    • Team on payroll consists of 2 solidity devs, 1 backend, 1 frontend and 1 designer (solimander, vapeape, devcarrot, seneca, toastee)
  • 60 ETH: Misc expenses
    • Smart contract audits
    • Helping Nounish communtiies get set up (e.g. Nouns DAO Japan was ~10 ETH)
    • Operations (infura, linear figma, etc)

Funding Builders (400 ETH):

  • Capital to deploy through funding auctions. We’re currently at a ~80 ETH / month rate. 400 ETH would allow for 5 months of funding across all nounish houses.

TOTAL ASK: 1000 ETH (600 PH contributors, 400 for builders)

With this grant, the funds received for one year (Dec '21 - Dec '22) of Prop House discovery and development over the three proposals would total:

  • 710 ETH for funding development
  • 550 ETH for funding prop builders.

Deliverables

  • Suite of smart contracts that allow anyone to fund and deploy their own funding auctions
  • Open-source front-end for anyone to fork and run their own web app
  • Documentation to help developers and communities alike get started

Sustainability

We are exploring ways to make Prop House sustainable such that no future ask is required from Nouns DAO. While we are still open to any paths forward, one that seems plausible is creating Prop House DAO where Nouns DAO has meaningful ownership of the newly formed DAO. This would allow Nouns DAO to continue to capture any upside that comes from Prop House while aligning incentives accordingly.

9 Likes

This is such an important step in the tokenisation of the world imo. Nouns DAO is in the perfect position, with an immensely talented swarm of builders, to really make all of this a meaningful contribution to society.

The power of this, enabling new foundations in an open way is a force to be reckoned with and it’s clear why other builders are looking to Nouns DAO for inspiration at the bare minimum.

I believe this DAO is changing the world quicker than most realise and embracing the foundational aspects of it like this makes perfect sense to me.

I thank you for all of your contributions, it’s an honour to witness the elegance of this protocol and its contributors.

⌐◧-◧

6 Likes

This is fantastic and it is great to see in detail how successful this has become in such a short time. Thank you for the time and effort you have spent on this and I am excited to see how this evolves in the future. I too am particularly interested in the Sustainability aspects you touched on at the end and I will share more thoughts on that below (cross-posted from nouner-general)

I have spent a lot of time thinking about this. We have had issue with talent retention because offering builders equity upside in the projects they bring to the DAO is still a challenge for us. Noun ownership rewards (whether fractional or whole) is one method we have discussed quite a bit, but 1 year later, I do not think that is the silver bullet. I’m not sure if a Noun offers a venture equity-like 50x return on investment. Perhaps that type of return could be possible with select Nouns, but even then it would require the Noun’s owner to sell the Noun and quit the DAO and that just makes no sense as an exit/liquidity event for the DAO or the Nouner.

These are still very early thoughts and are subject to change, but I think the path needs to be to creating a way for people to launch DAOs that leverage the Nouns brand and Nouns treasury for initial funding but are able to become self funding by leveraging the Nouns auction mechanism to distribute ownership of the protocol to fund ongoing operations. A few thoughts:

  • Until now, the only fork that we have seen doing a direct kickback to the Nouns treasury is Lil Nouns, in the form of Lil Nouns NFTs. I think this has been amazing, but it has some limitations. Nouns cannot realistically monetize these Lil Nouns, and the governance value of them is unclear. Make no mistake, governance IS work - but it’s work people will do if there is a reward. But I am convinced that the future is NOT going to be Nouners having to inform themselves and vote on the governance of 1000 different protocols building on top of the Nouns protocol, unless there is meaningful financial incentive
  • Small Grants is in the process of funding Foodnouns, which is the first extension project that leverage the Nouns auction distro mechanism + would send a portion of the auction proceeds TO the Nouns treasury. This novel mechanism, whether alone, or possibly in combination with protocol ownership is an exciting design space (edited)
  • I do not think Nouns would need to own the entirety of protocols/cash flows that stem from projects built on top of it. I don’t know the right number, but maybe something in the 15-30% area? Just a stab in the dark
1 Like

Fenomenal work! The Nouns Protocol itself is already a milestone in decentralized infrastructure. The Prop House protocol takes things to a new level. No wonder so many projects are already interested in adopting it.

I firmly believe that the DAO funding this type of infra does more to ploriferate Nouns than we might think.

:clap::clap:

2 Likes

Just wanted to express support for this as well, proliferating and open-sourcing this kind of innovative infrastructure is one of the things I think that gives Nouns a really powerful potential to spread, beyond doing (cool) things like putting Nouns glasses on everything.

IMO it may turn out that this innovative mechanism design and architecture for others to use and improve turns out to be one of the most consequential things Nouns can create and support.

2 Likes

Generally agree with the latter points.The path for outsized returns where both creators and Nouns win is:

  • Dao provides initial funding
  • Project launches their own DAO
  • New DAO allocates a % of the minting/proceeds/rev back to Nouns DAO

It is a positive sign to see various people around the DAO come to more or less the same conclusion. That said, I’m still open to seeing wha nouner consensus is before committing to any decision (spec. given the permanent nature of what creating a new DAO entails).

1 Like

I’m a proponent of the “revenue back” NOT being ETH back to the Nouns treasury but rather the DAO buying Nouns NFTs and having a “percentage of treasury held in Nouns” target similarly to how Lil Nouns is deciding to do so with a 30% lower bound target.

This will allow the new DAO to have upside exposure to the overall Nouns ecosystem proportional to their success / contribution beyond it just being a tax on sales (avoiding the uni-directional franchisee of the Nouns brand relationship).

3 Likes